Carjack: GM Plans to Pinch Rivals' Lessees in Direct Push

DETROIT (AdAge.com) -- A year after failing to move the metal with mass-marketed discounts and incentives, General Motors is now going after buyers one by one with an unusual offer: It will pay off the leases of people who drive competitors' brands.

The stealthy direct-mail pitch by the automaker dangles a deal before drivers of Fords, Toyotas and any other competitor models to pay off up to $2,000 of their leases if they buy or lease a 2006 or 2007 GM vehicle. Such DM tactics are not unheard of-the industry routinely targets its own lessees with so-called early pull-ahead programs-but it's not common for automakers to target lessees of other brands. And experts said the breadth of the program at GM, whose U.S. sales are down 9% through October to 3.4 million units, is more sweeping than most. If successful, it likely will spark a barrage of similar offers from rivals.

GM's "private offer" is transferable, but only to someone who lives in the same household as the person who got the mailing. It can be combined with certain other GM incentives but delivery must be taken before Jan. 2. Details are outlined on a website that's listed in GM's direct mailer, found at gm.com/leaseoffernov06. Only four GM models are exempt from the promotion: the Corvette Z06, Hummer H1, Pontiac Solstice and Saturn Sky.

"The ultimate goal is to conquest sales," said a GM spokesman. While he confirmed the program was national, he declined to reveal how many direct-mail pieces were sent or how prospects were identified. The automaker has tried this approach before, although he wouldn't say when. He called the offer one of many GM incentive programs that vary by region and model. "This is all very consistent with our strategy to do incentives for limited periods of time for a limited number of people."

But the auto giant clearly feels the need to act. Its fourth-quarter North American production will be 1.11 million vehicles (450,000 cars and 660,000 trucks) compared to 1.28 million units for the same period in 2005, when it built 483,000 cars and 798,000 trucks. It took GM 80 days to turn over its inventory from dealer lot to consumer garage in September and October, according to Power Information Network, though that's far less than the 120-day rate at Chrysler Group.

Wes Brown, an analyst at consultant Iceology, estimates that GM sent out at least 1 million direct-mail units for the program, since it covers nearly every model. Other automakers have done similar programs aimed at competitors, but probably not to the extent that GM has, he said. "When GM does it and included 99% of its vehicles, you've got to assume the [target] numbers are greater."

Since leasing is higher among luxury marques, the offer will probably help Cadillac more than GM's other brands, said Tom Libby, senior director-industry analysis at the Power Information Network. He added that other automakers will closely monitor whether GM's move hurts their business and will fire back if need be.

Once derided as "carpet bombing," direct mail is gaining favor with automakers as technology has evolved to become more sophisticated, said Mr. Libby. Direct mail is very cost-efficient and "under the radar," which should help GM vehicle sales through year's end, he said.

GM's Mark LaNeve, VP-vehicle sales, service and marketing in North America, vowed at the Detroit auto show in January that the company would do "a lot less" umbrella multibrand incentives, such as 2005's summer employee discounts. He said those broad programs, which started after Sept. 11, 2001, caused big peaks and valleys in monthly sales as the promotions came and went. GM's vehicle brands got the reputation of being on sale all the time, Mr. LaNeve said at the time.